Jan 13

Finance Minister

Then, if those accounts venezolanas could close without significant inconvenience with a price of oil 10% higher: why not to devalue the Venezuelan currency by 10% and thus achieve that greater income that would be needed? Logically this is not an idea that I would recommend, but that I guess it may be an alternative that is evaluating Chavez. But OPEC already thought about a strategy that benefits Chavez, although not completely resolves the problem that has occurred you by the strong decline in the price of oil, and that simply consists of the reduction of the daily production of barrels. In this agreement arrived, Venezuela would reduce its daily production of oil in 129,000 barrels. Although it is a decision that serves to these countries, including Venezuela, to hold the price of a barrel of oil, is certainly not a good decision in moments in which the global economy is at the gates of a recession. This decision could aggravate the global crisis situation to generate some kind of inflationary momentum. And for Venezuela it could have negative implications in terms of inflation imported, whereupon, the benefit of this measure is perhaps be null. But returning to the subject of the dollar, its value in Venezuela maintains very worried to his Finance Minister.

Ali Rodriguez Araque, admitted in a television interview that this represents a dilemma for the economic cabinet: someone will tell me, well, if you have an overvalued dollar, then it is easier to import than produce, in part that is true, but it is also true that as we have a heavy dependence on imports, if we tarnish we will strongly expensive imports. But based on the value that exhibits the parallel dollar, it is clear that long ago, the official price of the dollar in Venezuela is a fictional quote. What you are doing in other words the Venezuelan Government is subsidizing the value of the dollar to import necessities for the population unless it moves to prices. But this increases the distortions in an economy that increasingly thinks less in produce. And given the high inflation level that has the economy of Venezuela (which in the month of September, accumulates a rise of 21.8%, being the interannual variation of 36% for the retail index, 53.3% for the category food), Venezuelan companies production costs rise at greater pace than what companies and of the main trading partners of the country do (i.e.(: United States, Brazil and Colombia). This situation of the quotation of the dollar in Venezuela in a totally fictitious value, is destroying much of the productive sectors of the country, transforming Venezuela practically in a single commodity producer: oil. According to published a note in the Venezuelan newspaper El Universal: the statistics of the Central Bank stripped the effects of overvaluation (of the Bolivar fuerte). Comparing the first half of 2005 with the same period of 2008, imports recorded an increase of 102 % While non-oil exports, a thermometer how to reverse the attempt to reduce the dependence on crude oil, fall 13.2%.

The situation of the Venezuelan economy is certainly more than complex. But it is increasingly necessary to take immediate economic measures to combat the inflation scourge and to adjust the value of the dollar, at least gradually. If Chavez does not react, the currency of their main enemy will finally destroy his Government. Thus the dollar, has become one of the main threats from Chavez.